Optimum Leverage Ratio
Optimum Leverage Ratio
The borrowing level that maximizes the value of the firm. The cost of capital to the firm is minimized at that same level.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Optimum Leverage Ratio
The debt-asset ratio that allows a company to achieve the highest possible return without taking on excessive risk. The optimum leverage ratio minimizes the cost of capital without acquiring a high possibility of default.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved